In a surprising move just days before the final trilogue negotiations were scheduled, the European Commission has decided to withdraw its proposal for the Green Claims Directive (GCD). This decision, announced on 20 June 2025, has stirred debate among stakeholders across the environmental, regulatory, and voluntary carbon market communities. The withdrawal raises critical questions about the EU’s regulatory direction on greenwashing and the reliability of environmental claims in the internal market.
A Directive Meant to Restore Trust
The Green Claims Directive was introduced as part of the European Green Deal’s legislative framework, aiming to combat greenwashing by obligating companies to substantiate environmental claims with scientific evidence, third-party verification, and consistent reporting. It was widely regarded as the EU’s response to mounting criticism over unregulated or misleading sustainability marketing, particularly in sectors with complex supply chains and climate implications.
After months of technical negotiations and political compromise, the directive was nearing its final stages. The trilogue — the EU’s standard legislative process involving the Commission, Parliament, and Council — was expected to produce a finalized text that would give consumers across Europe stronger assurances on what companies claim about their products’ environmental benefits.
Why Was the Directive Withdrawn?
The decision to withdraw the proposal was reportedly driven by a combination of political pressure, strategic recalibration, and internal disagreement over the administrative burden the directive would impose. In particular, the European People’s Party (EPP) had voiced strong opposition to the draft legislation, arguing that it would impose disproportionate costs and bureaucratic hurdles on small and micro-enterprises. Their argument was framed in the context of the Commission’s “simplification agenda” — a strategic effort to reduce regulatory complexity and cut red tape across EU law.
Sources close to the process suggest that the Commission feared a legislative deadlock. Despite the Parliament and the Council reportedly being ready to proceed with negotiations, the political climate — just one month after the EU elections — was not seen as favorable for pushing forward legislation that could be portrayed as anti-business or overly technocratic.
Fallout for Climate Credibility and the Voluntary Carbon Market
The implications of this withdrawal are significant. Without the GCD, there is now no EU-wide mechanism ensuring that environmental marketing claims are robust, science-based, and independently verified. While some EU countries have their own national rules, the absence of harmonized legislation creates a fragmented regulatory landscape across the Single Market. This could diminish consumer confidence and open the door to inconsistent enforcement or continued abuse of green branding.
Perhaps more critically for market actors, the withdrawal also appears to reflect concern over the proposed exclusive reliance on the Carbon Removal Certification Framework (CRCF) — the EU’s recently adopted system for certifying carbon removals. Critics of the directive feared that relying solely on CRCF as the verification pathway for green claims would exclude broader forms of climate action, especially voluntary carbon credits not covered by CRCF protocols. This would have potentially undermined the voluntary carbon market (VCM), where companies voluntarily purchase offsets to meet ESG goals or carbon neutrality commitments.
Stakeholder Reactions
Reactions have been swift and politically charged. Green and Social Democrat MEPs have denounced the withdrawal as a “surrender to conservative lobbying” and a blow to the EU’s Green Deal credibility. Environmental NGOs warned that the absence of GCD will embolden companies to continue making unverifiable or misleading climate claims with little fear of consequence.
On the other side, business associations and EPP representatives welcomed the move as a victory for SMEs and a reaffirmation of proportionality in regulation. They insist that most businesses support credible environmental communication — but not at the cost of excessive compliance burdens.
Meanwhile, organizations like IETA (International Emissions Trading Association) have expressed concern that the EU is failing to provide the market with clear guidance on how carbon claims — especially those involving voluntary credits — can be communicated without falling foul of consumer protection laws. In the absence of GCD, these questions remain unresolved.
CRCF: The Last Mechanism Standing?
With the Green Claims Directive now shelved, attention will likely shift toward the CRCF as the only formal mechanism in the EU framework for certifying climate impact claims. The CRCF establishes robust criteria for carbon removals, focusing on additionality, permanence, traceability, and environmental integrity. It covers both nature-based solutions (e.g., afforestation) and technological solutions (e.g., direct air capture), and has been praised for its scientific rigor.
However, CRCF was never intended as a blanket substitute for the GCD. It only covers carbon removals — not avoided emissions, reductions, or broader environmental impacts. Its scope is far narrower than what the Green Claims Directive envisioned. Stakeholders will now be watching closely to see if the Commission expands CRCF’s application or introduces a replacement legislative proposal that can fill the regulatory vacuum.
What Happens Now?
The Commission must now formally notify the European Parliament and the Council of the withdrawal. While these institutions have the right to object, such interventions are rare and unlikely to succeed without Commission support. The withdrawal effectively resets the clock on green marketing legislation — and leaves companies operating in a grey zone when it comes to carbon neutrality claims and environmental labelling.
Businesses active in sustainability communications should consider:
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Auditing their current environmental claims for robustness and evidence-basis;
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Monitoring the evolution of the CRCF for compliance and reputational alignment;
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Preparing for the possibility of future EU legislation that could resurrect key elements of the Green Claims Directive in another form.
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